Tenant application fraud has become an increasingly sophisticated challenge for Texas landlords and property managers. Based on years of experience in the field, the firm has observed a significant evolution in the tactics used by fraudulent applicants to bypass traditional screening methods.
The Rise of Falsified Documentation
In years past, verifying a tenant’s income was a straightforward process involving a review of physical pay stubs. Today, however, technology has made it “commonplace” for applicants to provide high-quality, falsified pay stubs. These documents are often so well-crafted that they are difficult to distinguish from legitimate ones, though some still bear the hallmarks of being created on simple platforms like Google Worksheets. Since the COVID-19 pandemic, the frequency of these fraudulent submissions has reached unprecedented levels.
Understanding the “Free Rent” Scheme
The primary goal of this criminal behavior is to secure a property with no intention of paying rent beyond the initial security deposit and the first month’s payment. These individuals exploit the legal system, knowing that the eviction process in Texas can take anywhere from three to five months. By providing falsified identities and income documents, they gain entry to the property and stay as long as possible to collect “free rent” before moving on to their next target. Under Texas law, specifically Texas Penal Code § 32.32, it is a criminal offense to intentionally or knowingly make a materially false or misleading written statement to obtain property or credit, which includes falsifying a rental application.
The High Cost of Verification for Landlords
To combat this surge in fraud, landlords are increasingly utilizing third-party verification services. While these services provide direct data from employers, they come with significant costs. For low-volume users, a single verification “click” can cost up to $50. When combined with the cost of a comprehensive background check—which typically consumes 90% of a standard $75 application fee—landlords often find themselves with no remaining funds to cover the actual costs of professional due diligence.
Despite the rising costs of tenant screening, prudent landlords and management companies are finding that a traditional and common sense approach to screening remains effective in the era of AI. Verbal verification of employment and previous rental history are often the best defense to tenant fraud.